South Dakota’s Attempt to Redefine Currency with the Exclusion of Cryptocurrencies

03/02/2023 10:06 • NFT Newsflash • 225 views

On March 2, South Dakota, the United States, is taking action to try to redefine the composition of currency, and involves the classification of cryptocurrency. A bill in the state entitled “Amendment to the Uniform Commercial Code” indicates that digital currencies such as Bitcoin will be excluded from the definition of currency because they come from individuals or organizations. According to the proposed amendment, a possible medium of exchange will only be recognized as currency if it is “authorized or adopted” by the government.

South Dakota proposed a bill to change the definition of currency and exclude digital currency

Interpret the above information:

South Dakota is taking a bold step towards redefining the composition of currency by excluding digital currencies like Bitcoin from its definition. The state is proposing an amendment to the Uniform Commercial Code, which defines how commercial transactions take place within the United States. The proposed amendment specifically targets cryptocurrencies by stating that any medium of exchange can only be recognized as a currency if it is authorized or adopted by the government.

The proposed move is not surprising given that cryptocurrencies have been a subject of debate globally. While it is true that cryptocurrencies have gained popularity in recent years, the government has been cautious about legalizing them due to numerous reasons such as the risk of fraud, possible tax evasion, and the potential use of these digital currencies for illegal activities. Nevertheless, South Dakota’s proposed amendment seems to be taking an extreme position as it will undoubtedly exclude digital currencies entirely from the definition of currency.

One argument in favor of the amendment is that currency must retain its essential characteristics, mainly if it is backed by a particular government. Currency is considered legal tender only when it is authorized by the government and backed by its assets. Therefore, according to the proposed amendment, digital currencies such as Bitcoin that are not regulated by any government should not be recognized as currency. In this case, the amendment seeks to regulate cryptocurrencies by only approving them once they meet traditional currency standards.

On the other hand, some argue that cryptocurrencies have emerged as a viable currency alternative due to their unique mode of transactions, mainly blockchain technology. The blockchain enables the digital currencies to record transactions uniquely, making them less vulnerable to fraud, and more reliable. Therefore, the exclusion of cryptocurrencies from the definition of currency could take away their fundamental character, which is decentralization.

In conclusion, as South Dakota moves forward to redefine currency and classify cryptocurrencies, their stance on this matter will act as a precedent for other states and countries. The adoption of the amendment will be a significant threat to the existence of digital currencies in the U.S, and possibly, the world. Nonetheless, the government’s regulation of cryptocurrencies is not entirely unwarranted. South Dakota’s move presents a critical moment in the development of digital currencies and requires careful considerations to balance innovation and regulation.

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